Case Law Details

Case Name : Ratnagiri Impex Pvt Ltd. Vs DCIT (ITAT Bangalore)
Appeal Number : ITA No. 14/Bang/2013
Date of Judgement/Order : 05/09/2014
Related Assessment Year :
Courts : All ITAT (4864) ITAT Bangalore (237)

Section 194C of the I.T. Act provide that any person responsible for paying any sum to any resident for carrying out any work (including supply of labour) for carrying out any work, in pursuance of a contract between the contractor and a specified person, shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by any other mode, deduct amount equal to 1%,

where the payment is being made or credit is being given to an individual or HUF, 2% where the payment is being made or credit is being given to a person other than an individual or HUF, of such sum as Income Tax on income comprise therein. Explanation attached to this section provides the definition of work. In this definition payment to a hotel for boarding does not fall within the ambit of work. The assessee has not hired services of any event organizer. It simply booked the hotel for boarding. The hotel did not work on behalf of the assessee as a contractor. Otherwise every guest whosoever stay in a hotel ought to have deducted TDS while making booking or staying in it. The Hon’ble Bombay High Court has considered this issue in the case of East India Hotels vs. CBDT in CWP No.2 104 of 1994. The CBDT had issued a circular bearing No. of 681 dated 8.3.1994 which was challenged in the High Court. The Hon’ble High Court has considered the following question based on the circular and has quashed the circular. The Hon’ble Court held that section 194 C is not applicable for payments made by the customer to the hotel. The first and last three paragraphs of the judgment read as under:

“1. The said circular provides that all service contracts are covered under section 1 94C of the Income Tax Act, 1961 (‘Act’ for short). As a result whereof, every customer of the petitioner No.1 hotel, while making payment to the hotel for occupying its room and availing other facilities /amenities provided by the hotel is required to deduct income tax at the rate specified in section 194C of the Act.”

22. In the present case, we are concerned with the question as to whether the services rendered by the petitioner hotel to its customers is covered under section 194C of the Act?

23. As noticed above, the facilities/amenities made available by the petitioner No.1 hotel to its customers do not constitute ‘work’ within the meaning of section 194C of the Act. Consequently, the circular No.681 dated 8/3/1994 to the extent it holds that the services made available by a hotel to its customers are covered under section 1 94C of the Act must be held to be bad in law.

24. For all the aforesaid reasons, the petition is allowed by quashing the circular No.681 dated 8/3/1994 to the extent it holds that section 194C of the Income Tax Act applies to payments by the customers to the petitioner No.1 hotel for availing the facilities/amenities made available by the petitioners”.

Respectfully following the decision of the Hon’ble Bombay High Court, we delete the disallowance made by the Assessing officer.

Download Judgment/Order

More Under Income Tax

Posted Under

Category : Income Tax (26967)
Type : Featured (4122) Judiciary (11144)
Tags : ITAT Judgments (5046) Section 194C (140)

10 responses to “TDS u/s 194C not applicable on Hotel Booking”

  1. ARUNAVA DASGUPTA says:

    we get bookings oh hotel rooms from various travel agents.
    Do we need to deduct TDS
    Please advice
    Thanks

    ARUNAVA DASGUPTA

  2. T V RAMANA RAO says:

    our company will paid to Hotel for Hotel stay charges of Rs. 85000/- now in this case tds applicable or not ? if yes pls give pecentage of tds

  3. T V RAMANA RAO says:

    our company paid an amount of Rs. 80539 against hotel stat charges can we deduct TDS or not for this case if yes pls give percentage of TDS

  4. sanjay kumar swain says:

    on 07.06.16 our company organised a promoter meet at Hotel Empires. which including food and room. The total bill amount is above Rs.50000/-. Shall we deduct TDS. If yes what is the percentage of TDS deduction.
    Waiting for your reply.

  5. Yash says:

    Recently, our company has appointed a travel agent for booking of all the hotel stay requirement of company’s employee, when they out of city for office work. Agent raises a invoice on a monthly basis for all the booking done by him. However in his invoices, he doesn’t show his service charges separately.
    For 1st & 2nd invoice, we have deducted TDS @ 194C on whole amount of invoice. Is this correct approach?

    Please tell me tds will be attracted for such payment & under which section?

  6. CMA Navneet Aggaral says:

    Mr. Adiga

    In my view, Payment to Travel agent would generally fall u/s 194C for hotel booking (provided minimum payment criterion is met).

    But, if payments are made for Hotels & Accommodation taken on regular basis (specific hotel / hotel room, etc.), then payment would fall u/s 194I provided minimum Annual payment criterion ie. Rs. 180000/- is met).

    It must be seen that hotel/accommodation is taken on regular basis. This condition should be checked thoroughly.

  7. Pratik Janrao says:

    Sir please Please guide us weather TDS is applicable for hotel accommodation charges paid to hotel situated abroad.

  8. MURALI says:

    Hi Sir,

    Please guide us weather tds is applicable for hotel accomidation charges.

  9. ajay purohit says:

    SIR KINDLY GUIDE US WE ARE AN ASSOCIATION OF EX STUDENTS OF A COLLEGE DULY REGISTERED WITH THE CHARITY COMMISSIONER AND INCOME TAX. we HAVE INCOME FROM DEPOSIT ON CORPUS FUND ACCUMULATED BY US OF RS 50,000/-IS THERE ANY INCOME TAX PAYABLE ON THE SAME IF YES THEN BY WHICH RATE AND UNDER WHICH SECTION

  10. Subrahmanya Adiga K says:

    with reference section 194C regarding nondeuction of tds on hotel booking, our company is booking hotel rooms to our dealers for party through agents. Please clarify whether we have deduct tds to agents payment?

Leave a Reply to CMA Navneet Aggaral Cancel reply

Your email address will not be published. Required fields are marked *